Microsoft’s PC Sales Estimates Lowered By Goldman Sachs

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Microsoft’s PC Sales Estimates Lowered By Goldman Sachs
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Microsoft's PC Sales Estimates Lowered By Goldman Sachs

Goldman Sachs Group, Inc. (NYSE:GS) has updated its forecasts on Microsoft Corporation (NASDAQ:MSFT)’s Windows, due to a change in its report on PC shipment forecast. In its PC shipment forecasts published on September 27, Goldman has lowered its PC forecasts on account of continued demand deterioration. The PC shipment report from Goldman compares the updated and prior forecasts for PC and tablet shipments for the year 2012 and 2013. The report also highlights the PC plus Tablets shipments for the years. As per the report, PC shipments have decreased, while the shipments for Tablets have shown improvements.

Goldman Sachs has lowered their operating expenses forecast for the year 2013, to $30.3 billion, from the earlier figure of $30.5 billion, as it believes “management will look to further control spending, given continued PC demand deterioration”. Also, the report has lowered its sales and marketing assumption for the quarter ending in September, giving reasons for such a move, the reports states “we previously assumed a heavy promotional period leading up to the Windows 8 and Windows Phone launches”. About sales and marketing expenses, the report says “We are now modeling September quarter sales and marketing expense of $3.1 billion, down 19% qoq (prior: down 13% qoq), which compares to an average decline of 24% over the past two September quarters, and down 13% in the September quarter, ahead of the Windows 7 launch”.

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The report from Goldman forecasts a lower than consensus EPS for September. The key drivers for low EPS forecasts are low revenue forecasts and gross-margins assumptions. Due to the Windows upgrade offer and $1.1 billion of revenue deferral in the quarter, the report expects a decline of 220 basis points in Gross margins against a 230 basis points quarterly decline, with the launch of Windows 7.

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